Developer seeking tax breaks for Long Beach apartment project

Nassau County development agency postpones hearing after outcry from residents

Posted
Thursday, November 16, 2017 2:55 pm

A developer is seeking tax breaks to convert a vacant building at 249 E. Park Ave., pictured, into rental units.

Christina Daly/Herald

By Anthony Rifilato

The Nassau County Industrial Development Agency postponed a public hearing this week to discuss a developer’s request for a 15-year tax break to convert a vacant office building on Park Avenue into 23 apartments, after a number of residents called on the agency to reschedule the meeting, saying there was no public notification.

The hearing — initially set for Tuesday at 4 p.m. at the Long Beach Public Library, and to be followed by a vote by the agency on Thursday — was canceled and has yet to be rescheduled, an IDA spokesman said on Monday. The IDA informed the county, city and school district of the hearing on Oct. 26. Residents said they learned of the hearing only on social media last weekend, and criticized its scheduling during working hours.

“We reached out to the IDA and, thankfully, they went along with not having the hearing today,” County Legislator Denise Ford said on Tuesday. “I think we should be given an opportunity to look at [the request], and see exactly what they’re asking for.”

Developers Allen and Seth Pilevsky, principals of LBH249 LLC, received approval from the city’s Zoning Board of Appeals last year to convert an existing four-story building at 249 E. Park Ave. — between Long Beach and Monroe boulevards, next door to New York Sports Club — into nine one-bedroom and 14 studio apartments.

The 16,000-square-foot building, which the developer purchased in 2007 for $1.65 million, is in a commercial zone, and has been vacant since its main tenant, the Long Beach Medical Center, closed after Hurricane Sandy. The zoning board granted approval in March 2016 for residential use as well as front yard, height and off-street parking variances to facilitate the building’s refurbishment.

Christian Browne, an attorney for Pilevsky, told the board in December 2015 that the building’s proximity to the city’s downtown area, the Long Island Rail Road station and the beach would appeal to the young professionals and singles the Pilevskys hope to attract. Studios would rent for $1,150 to $1,250 a month, and the one-bedrooms for $1,500 to $1,600.

Though some residents had raised concerns about parking and traffic, the proposal did not receive much opposition, and had its share of supporters. Browne cited a demand for such rentals in Nassau County, especially those located in downtown areas and near LIRR stations. He told the board that if the project were approved, it would take about 18 months to complete.

In August, Pilevsky filed an application with the county IDA for a payment in lieu of taxes, or PILOT, program for the conversion. The existing building currently pays $89,547 per year in property taxes. Under the proposed PILOT, taxes would be frozen for three years at $73,766 per year, followed by 1.26 percent annual increases. In addition to property taxes, the developer is also seeking breaks on $112,550 in sales taxes and $18,750 in mortgage recording taxes.

In its application, the developer said that the cost of renovating the building without a PILOT would be too high, and that it would not proceed with the project without it. “The building will continue to sit vacant,” the application stated, “and there will be no further increase in real estate taxes or much-needed apartments for this area.”

“Why would he buy the building if he couldn’t afford to renovate it?” City Councilman-elect John Bendo asked. “There needs to be a cost-benefit analysis presented to the public to show what benefits might be derived from the project in exchange for a tax break. And that should be given to the public before any hearing so they can review it.”

Seth Pilevsky did not return a call seeking comment as the Herald went to press on Wednesday. An attorney for LBH249 LLC also did not respond.

Pilevsky told the ZBA in 2015 that he had made attempts to lease the space to other businesses over the previous several years, but was unsuccessful. Browne added that apartments would be more profitable.

Pilevksys’ request for tax abatements came after residents criticized the city over a settlement agreement it reached with the developer iStar in 2014 that included support for a PILOT request, albeit for an unspecified term. City officials have emphasized that the IDA is ultimately responsible for approving or denying such requests.

It could not move forward with plans to build two luxury apartment buildings on the Superblock without a PILOT, iStar said, even though the firm’s representatives had said it had the financial wherewithal to fund the project before the ZBA granted the variance. The IDA rejected two of the developer's requests for tax breaks.

“I would like all IDAs, if somebody comes before them for any kind of tax break, to take in consideration any type of variance that was given,” Ford said. “[Pilevsky] already received a benefit in helping to build. I think we really need to start looking at these construction projects and apartments, and what the benefits are of providing them with a PILOT.”

Local IDAs have come under fire for approving projects that many say create little or no economic benefit — such as car dealerships and storage facilities — and tend to favor developers and businesses. In a recent report, the Citizens Budget Commission said that IDAs “do not have a strong record of making sound economic development investments.”

In its application, LBH249 LLC said that the $3.2 million project would have a positive impact on the community by “providing much-needed apartments” and create 45 temporary construction jobs.

“We hope the IDA makes a decision in the best interest of our taxpayers,” City Council Vice President Anthony Eramo said. “Obviously, we need to reform the Nassau County IDA; anyone that lives in Long Beach knows that. I look forward to [County Executive-elect] Laura Curran doing just that.”